[Click eStock] "IBK, Attractive Cash Dividend... Target Price Raised to 20,000 Won"

Kiwoom Securities raised the target price for Industrial Bank of Korea (IBK) from 17,000 KRW to 20,000 KRW on the 22nd, citing increased attractiveness of its cash dividends. The investment rating was maintained as a buy.

Kim Eun-gap, a researcher at Kiwoom Securities, stated, "Although the stock price has recently risen, the price-to-book ratio (PBR) of 0.35 times is absolutely low, and considering the return on equity (ROE) forecast of 8.6%, it is still low compared to fundamentals. The target PBR corresponds to 0.47 times as of the end of 2024. The sales volume of H-index ELS is very small compared to other major banks, and it is understood not to be in a loss zone, so there is almost no related uncertainty," he analyzed.

He forecasted that IBK's consolidated net profit for 2024 will increase by 5.5% from last year to 2.82 trillion KRW, continuing its record-high performance. Researcher Kim said, "Stable NIM, steady loan growth, and a decrease in provisioning costs are expected. The additional provisioning cost, which was about 900 billion KRW in 2023, is expected to decrease in 2024 compared to 2023, although not significantly."

Considering the recently favorable investment sentiment toward bank stocks, he believed that it would not take long for the stock price to recover after the ex-dividend date. IBK's record date for year-end dividends is March 29. The dividend per share is 984 KRW, which corresponds to a dividend yield of 6.5% based on the closing price on the 21st.

Although share buybacks and cancellations are structurally and institutionally difficult, if IBK can raise its dividend payout ratio in line with the increased shareholder return rates of other banks, it could be a good investment option for dividend-preferred investors.

Researcher Kim said, "If value-up policies become an issue, IBK will inevitably follow the total shareholder return rates of other banks by raising its dividend payout ratio. The dividend payout ratio for 2023 is steadily increasing at 29.4% on a consolidated basis, and the possibility of further increases seems high."